BACKGROUND: Outcomes of health care interventions can be measured in many different ways, but there has been growing interest in the role that quality-adjusted life-years (QALYs) can play in informing priorities in health care. While existing generic preference-based measures can be used to obtain QALYs, these measures may often be inappropriate for some conditions such as atopic dermatitis (AD). These measures are also usually developed for adults and may not capture the domains pertinent to children. OBJECTIVES: To develop a preference-based quality-of-life measure for use in children with AD. METHODS: Items generated from interviews conducted with parents of children with AD were used to form a health state classification system that gives 16 unique health states. One hundred and fifty members of the general population were interviewed to derive preference weights for these states, following the methods used in the valuation of the Health Utilities Index 2 (HUI 2). Each person valued 10 health states using the standard gamble technique. The primary analysis was the estimation of mean health state values for each of the 16 states. RESULTS: Mean values across the 16 health states range from 0.36 (SD = 0.36) for the worst state to 0.84 (SD = 0.19) on a scale from zero to one, where zero is for health states thought to be as bad as being dead and one is for perfect health. There was some support for the validity of the values from the fact that the values were logically consistent with the ordering of the health state classification system. CONCLUSIONS: These results show the perceived importance of the defined health states of childhood AD to the general population. The resultant health state classification and values can be used to calculate QALYs for use in assessing the cost-effectiveness of interventions for children with AD.